Do’s & Don’ts Of Mutual Fund Investing In A Bull Market

By Adhil Shetty | August 11, 2017

mutual funds-bull market

The Indian market has experienced its fair share of highs over the last couple of years. With the Nifty now kissing the 10,000 mark, the last six months have been an upward trajectory in particular. Such a raging bull market usually gives rise to the temptation of tinkering with your Mutual Fund portfolio. While extensive shuffling may not be called for, here are some useful strategies that you can look to deploy in a subtle manner:

Value Investing

The concept of value investing is directed towards achieving long-term wealth creation in a sustained and disciplined manner. A value-oriented Mutual Fund focuses on stocks that are structurally sound and undervalued in an overheated market.

A long-term investor entering the market at a time like this might find that such funds have a place in a fresh equity portfolio. Although a slightly defensive ploy, the buy-and-hold strategy of value investing ensures success over long time horizons.

Conservative Strategies

For existing investors, a bull market can present the ideal opportunity to reduce excessive froth from the portfolio, and step out of the market for some time on booking profits at high levels.

The markets might continue to rise even after such a sale, but it is especially prudent to continue to hold onto funds investing in companies that are likely to prosper even when markets are down.

Long-Term Performance

There is also the inclination to frequently shuffle an equity portfolio by replacing funds with those that are category toppers. This is a dangerous thing to do. However, such funds, having made the most of the bull run tend to be affected the most when the markets reverse direction.

Always monitor a fund’s long-term performance and refrain from getting swayed by its statistics from the recent past. A fund that has beaten its benchmark over several market cycles always makes for a handy component of an ideal Mutual Fund portfolio, even if it falls short during the exuberance of one market peak or the other.

(The writer is CEO, BankBazaar.com)

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Adhil Shetty

About Adhil Shetty

Adhil Shetty is the Founder and serves as the Chief Executive Officer of BankBazaar.com. Adhil has a Master’s degree in International Relations with a specialization in International Finance and Business from Columbia University in the City of New York, and a Bachelor’s degree in Engineering from the College of Engineering Guindy, Anna University. Adhil is an expert in Personal Finance (Car loan/Home loan and personal loan) and he majorly consults on investment and spends rationalization for the Indian loan borrowers. His guidance is number based with real time interest rate calculations and hence useful for consumer’s real time query.

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